Joint Tax Filing for Spouses


A threshold issue for the design of any tax system is the taxing unit.  In Canada our taxing unit for personal taxation is and has always been the individual.

The Carter Commission recommended we change the taxing unit to families (spouses and their dependent children) on the grounds that families constitute the basic economic grouping in Canadian society and that “ability to pay” is therefore better measured by reference to the consolidated income of the family household, rather than each individual as a separate taxpayer.  But this recommendation was not adopted.

Today, with our steeply progressive rate structure for individual taxpayers, there is a serious problem of fairness – taxing individuals produces very different tax burdens for families with similar family incomes, depending on how their income is earned by the family members.  Some families try to alleviate the perceived unfair outcomes with property transfers to lower-income family members and other income-splitting strategies, which are now policed with our attribution rules and the “tax on split income”.  This would all be unnecessary if we changed the taxing unit.

In this op-ed, I argue we should allow spouses the option to report their income on a combined basis, like a number of other countries do.  In other words, let’s promote horizontal equity by permitting families to electively adopt a taxing unit that better reflects their true ability to pay.


- Professor Geoffrey Turner